Brazil’s Central Bank Sees 5.6% Inflation

Brazil’s central bank said on Tuesday 10 November 2026 that it needs tighter monetary policy for longer than it once thought appropriate, because inflation is climbing and expectations have drifted away from the target. In the minutes of its 3 and 4 November meeting, the bank’s rate-setting committee, known as Copom, forecast inflation of 5.6% for 2026, above the official ceiling of 4.5%.

Copom held the Selic, Brazil’s benchmark interest rate, at 13.75% a year on Wednesday 4 November, pausing a run of cuts. For US investors in Brazilian bonds, the real (Brazil’s currency) or ADRs (US-listed shares of Brazilian companies), the minutes say policy must stay restrictive for longer.

What Copom Said About Inflation

The minutes say consumer inflation accelerated in the latest readings, both in the headline index and in the average of the bank’s core measures, which strip out volatile items. Over 12 months, both sit above the upper limit of the tolerance band, which is 4.5%, or 1.5 points above the 3% target.

Copom’s reference scenario sees inflation, measured by the IPCA consumer price index, at 5.6% in 2026 and 4.7% in 2027. It falls to 3.5% in the second quarter of 2028, which is the bank’s current policy horizon.

Expectations have risen as well. The central bank’s weekly market survey, called Focus, puts inflation at 5.2% for 2026 and 4.8% for 2027, the minutes say, and expectations are above target at every horizon.

Four Shocks Behind the Rise

Copom lists four supply shocks that pushed up its forecasts. They are higher oil prices, El Niño weather, the end of Brazil’s 6×1 work schedule and a weaker real.

Copom ties higher oil prices to the conflicts in the Middle East, and says El Niño, a Pacific warming that disrupts weather, hurts farm output and energy costs. It says the end of the 6×1 schedule (six days on, one day off) affects labour costs, and that the real (Brazil’s currency) has weakened over uncertainty about domestic politics.

The bank’s reference scenario starts from an exchange rate of R$5.20 per US$, the rounded average of the ten business days ending on the last day of the week before the meeting. It also assumes the oil price follows the futures curve for six months and then rises 2% a year.

Copom says the world has become less friendly too. It cites prolonged wars in the Middle East and tighter monetary policy in advanced economies, which raise volatility in asset and commodity prices.

Why Rates Will Stay High Longer

The committee says every member shared one main conclusion. When expectations have come loose from the target, as now, it takes a larger and longer monetary restriction than would once have been appropriate, in our translation of the minutes.

Copom says it should not react to the first-round effects of supply shocks, but will react firmly if second-round effects appear. It adds, in our translation, that perseverance, firmness and serenity will help anchor expectations again.

The committee itself offers the counter-view: a sharper slowdown in demand could lower the risk that the shocks spread into lasting inflation. It cites weaker retail data and very high consumer and business credit rates, and projects economic growth below its potential.

What Prediction Markets Say

On Polymarket, an online prediction market, traders put 91.5% on no change in Brazil’s central bank rate at the December meeting as of 1:30 p.m. ET on 10 November 2026. A 25 basis point cut (0.25 percentage point) is priced at 6.6% and a 25 basis point rise at 1.2%, with US$69,021 traded across the five December-decision markets.

These are bets, not polls, and a price of 91.5% is a probability implied by what traders pay, not a forecast by the central bank. Kalshi, the other large US platform, which is regulated in the US by the Commodity Futures Trading Commission (CFTC), lists a market on the same decision, which showed 244 contracts outstanding on 10 November.

Why we show this: prediction markets turn real-money bets into a live probability that moves within minutes of the news, which is why investors, campaigns and newsrooms in the United States now follow them closely. We show them next to polls and official results, never instead of them.

Terms in Plain English

• Selic: Brazil’s benchmark interest rate, set by the central bank.
• Copom: the seven-member committee that sets the Selic.
• IPCA: Brazil’s official consumer price index, the yardstick for the inflation target.
• 6×1: a work schedule of six days on and one day off.

What It Means for You

A Selic of 13.75% keeps Brazilian interest returns high, but the bank’s own forecast still has inflation at 3.5% in mid-2028, above its 3% target. Investors holding the real should note that the bank itself names a weaker currency as a source of inflation.

The bank’s forecasts show inflation above its 4.5% ceiling in 2026 and 2027. On the bank’s own numbers, inflation stays above target through mid-2028.

What to Watch Next

Copom’s next decision is due on Wednesday 9 December. The minutes of that meeting will show whether the committee keeps its call for a larger and longer restriction.

What Is Not Known

The minutes do not say how long “longer” means or whether the committee will cut, hold or raise in December. They also give no numeric path for the Selic beyond the Focus survey path used in the projections.

More: Brazil news in English, our report on the September Selic cut, the August Copom minutes and why Brazilian mortgage rates are rising.

Frequently Asked Questions

What is Brazil’s Selic rate now?

The Selic is 13.75% a year after Copom held it on 4 November 2026. All seven members voted to hold.

What inflation does Brazil’s central bank forecast?

Copom’s reference scenario shows 5.6% for 2026 and 4.7% for 2027. It sees 3.5% for the second quarter of 2028.

Why did Copom keep rates high?

Inflation and expectations are rising after four supply shocks. The committee says it needs tighter policy for longer.

When is the next Copom decision?

Copom’s next decision is due on Wednesday 9 December 2026. The minutes of the 3 and 4 November meeting are already published.

Sources: Banco Central do Brasil, minutes of the 282nd Copom meeting (3–4 November 2026), released 10 November 2026; Polymarket, Bank of Brazil decision in December market, read 10 November 2026, 1:30 p.m. ET. Exchange rate as stated in the Copom minutes.